US Republican presidential candidate Mitt Romney today ignored the depressive impact of a 43-year occupation by telling Jewish donors to his campaign that "culture" and "providence" were reasons why Israelis were more economically successful than Palestinians.

In terms which outraged Palestinian officials, Mr Romney used a fundraising breakfast in Jerusalem to advance his own explanation for "the dramatically stark difference in economic vitality" between the two economies.

Seated beside the right-wing billionaire casino magnate Sheldon Adelson, who has indicated he could give up to $100m to the Republican campaign, Mr Romney said he had read books and drawn on his own business experience to understand why the difference is so great.

"And as I come here and I... consider the accomplishments of the people of this nation, I recognize the power of at least culture and a few other things," he said. Mr Romney listed an innovative business climate, the Jewish history of thriving in difficult circumstances and the "hand of providence."

The former Massachusetts Governor compounded his controversial remarks by severely understating the disparity between the two economies, saying that per capita GDP in Israel was around $21,000 (£13,375) compared with $10,000 (£6,370) in the areas "managed by the Palestinian Authority."

In fact, Israel had a per capita gross domestic product of around $31,000 (£19,745) in 2011 while the World Bank estimates GDP in the West Bank and Gaza at $1,500 (£955) per head. The Bank and the International Monetary Fund have repeatedly said the Palestinian economy can only grow in earnest if Israel lifts checkpoints and other restrictions.

Saeb Erekat, the senior Palestinian negotiator, accused Mr Romney of "racism" for saying that Israeli "culture" was more advanced than the Palestinians'. "It's Israeli occupiers and Palestinians under occupation, and that's why Palestinians cannot realize their potential," he added.

Mr Romney's explanation may have been more congenial to Mr Adelson, who has endorsed the contention by Mr Romney's defeated rival Newt Gingrich that the Palestinians are an "invented people."

Mr Romney was speaking hours after Israeli security forces shot dead one of 14 Palestinian workers seeking jobs in Jerusalem, who arrived at a checkpoint in a vehicle which police said failed to stop when ordered to do so. The Palestinian Prime Minister Salam Fayyad demanded an investigation and said he was holding Israel's government responsible for the death of Akram Badee Baader, 46, and the injuries of two others "who were all on their way to work."

Eyewitnesses told the Palestinian Centre for Human Rights that the workers had no permits and after being alerted to the presence of Israeli forces the driver was trying to turn back from the checkpoint when they opened fire.